Can Tesla have 1,500 robotaxis by year-end?

Deutsche Bank has raised its price target for Tesla (TSLA) to $470 from $440, maintaining a Buy rating, primarily driven by increased estimates for the company's robotaxi business. The bank projects Tesla could deploy up to 1,500 autonomous vehicles by the end of 2025, potentially growing to over 2,500 by mid-2026, which contributes $148 per share to its sum-of-the-parts valuation by 2035. While CEO Elon Musk also hinted at a flying Roadster, analysts note significant regulatory hurdles for such ventures, and caution that Tesla still faces risks related to EV demand, execution in mobility and robotics, and regulatory scrutiny over AI deployments.

Analysis

Deutsche Bank has raised its price target for Tesla (TSLA) shares to $470 from $440, maintaining a Buy rating, primarily driven by increased confidence in the company's robotaxi segment. This upward revision incorporates higher estimates for the robotaxi business, which is projected to contribute $148 per share to Tesla's sum-of-the-parts valuation by 2035. The bank anticipates a significant ramp-up, with Tesla potentially deploying 1,500 autonomous vehicles by the end of 2025, up from the current 150-200.

Tesla's CEO, Elon Musk, indicated plans for at least 1,000 robotaxis in the Bay Area and over 500 in Austin by year-end, with safety drivers expected to be removed in Austin by December. Deutsche Bank projects this fleet could expand to over 2,500 by mid-2026, highlighting that Waymo achieved over 20% ride-hail market share in San Francisco with an estimated 800 AVs. However, analysts note the system still requires refinement for managing demand peaks, parking, and airport drop-off rules.

Musk also teased a new flying Roadster, expected to be unveiled by year-end, though analysts believe it will be a hovering vehicle rather than a full eVTOL due to significant FAA regulatory hurdles. Despite the bullish outlook on robotaxis, Deutsche Bank cautions investors about ongoing risks. These include potential fluctuations in EV demand, execution challenges in mobility and robotics, and increased regulatory scrutiny concerning real-world AI deployments.

Key Decisions for Investors

• Investors should closely monitor Tesla's robotaxi deployment schedule and operational efficiency improvements, as this segment is a key driver of Deutsche Bank's increased valuation.
• Assess the evolving regulatory landscape for AI deployments and autonomous vehicles, as regulatory scrutiny poses a material risk to Tesla's mobility ambitions.
• Continue to evaluate broader EV demand trends and Tesla's execution in its core automotive and robotics segments, which remain fundamental risk factors despite the robotaxi upside.